Correlation Between PT Boston and Planet Properindo

Can any of the company-specific risk be diversified away by investing in both PT Boston and Planet Properindo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PT Boston and Planet Properindo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Boston Furniture and Planet Properindo Jaya, you can compare the effects of market volatilities on PT Boston and Planet Properindo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PT Boston with a short position of Planet Properindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Boston and Planet Properindo.

Diversification Opportunities for PT Boston and Planet Properindo

0.89

Correlation Coefficient

PT Boston  Planet Properindo

Very poor diversification

The 3 months correlation between SOFA and Planet is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding PT Boston Furniture and Planet Properindo Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Properindo Jaya and PT Boston is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PT Boston Furniture are associated (or correlated) with Planet Properindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Properindo Jaya has no effect on the direction of PT Boston i.e., PT Boston and Planet Properindo go up and down completely randomly.

Pair Corralation between PT Boston and Planet Properindo

Assuming the 90 days trading horizon PT Boston Furniture is expected to generate 0.92 times more return on investment than Planet Properindo. However, PT Boston Furniture is 1.08 times less risky than Planet Properindo. It trades about 0.39 of its potential returns per unit of risk. Planet Properindo Jaya is currently generating about 0.11 per unit of risk. If you would invest  1,900  in PT Boston Furniture on September 14, 2024 and sell it today you would earn a total of  3,900  from holding PT Boston Furniture or generate 205.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

PT Boston Furniture  vs.  Planet Properindo Jaya

PT Boston Furniture

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PT Boston Furniture are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Boston disclosed solid returns over the last few months and may actually be approaching a breakup point.

Planet Properindo Jaya

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Properindo Jaya are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Planet Properindo disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Boston and Planet Properindo

The main advantage of trading using opposite PT Boston and Planet Properindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Boston position performs unexpectedly, Planet Properindo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Planet Properindo will offset losses from the drop in Planet Properindo's long position.

The idea behind PT Boston Furniture and Planet Properindo Jaya pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.